Rather Than Another Interest Rate Rise - Inflation Absorption Through A 'SASI'.

Discussion in 'Economics' started by morganist, Nov 21, 2017.

  1. Dude, can't you at least copypaste articles? Making a topic with two links to advertise your blog isn't cool.

    I don't buy it that giving second tax-free allowance will motivate people to take a part-time job and work twelve hours instead of eight. Have you checked if the surveys say that people WANT to work more hours? You also say that such supply-side stimulus increases productivity and in turn output. Not really, tired people working twelve hours are likely to have lower productivity. Case of France and Germany shows that you can have productivity without the longest hours.

    My bet is that your plan would give incentives for tax evasion by splitting the primary job into two and introduce extra pages of tax code.
     
    johnnyrock likes this.
  2. truetype

    truetype

    So don't click, and don't read...
     
  3. In terms of the availability of time there was a link to another article called the Supplementary Income Co-operative, which was a way of providing a taxation advantage to new start ups but only available for people already working.

    In terms of productivity, if skilled workers already in work who have proven their ability to produce goods and services expand their work load it will be of the quality of the successful workforce. Skills developed in their primary occupation will be utilised in the new occupation.

    If there is enough of a financial benefit to expand their work load they will likely want to work more. For an individual on the lower rate of taxation in the UK, assuming they do not have to make a further National Insurance Contribution it will save them 29% through the SASI.

    For someone on the higher rate of taxation in the UK, it would save them between 42% and 49% through the SASI if they wished to work more. Many people wish to work more but with the high rates of taxation in the UK it is not worth it. The SASI makes it worth it.

    Say you can work for another four hours a week and you earn £10.00 per hour. If you have to pay 29%, 42% or 49% on that further earning you will only get £28.40, £23.20 or £20.40 respectively instead of the £40.00 a week with the SASI.

    Would you work more for £7.10, £5.50 or £5.10 per hour? You might for the £10.00 per hour you would get with the SASI. The progressive taxation system in the UK definitely makes it worth it. Plus there is no cost to the existing tax in take.

    In terms of the primary job being split. Most jobs come with a minimum number of hours making tax evasion difficult. In the case of zero hour contracts where this would be possible it would actually be a great way of relieving poverty and compensate for job insecurity.

    Sorry about the two links. I put the title of the article up and for some reason, unaware to me when doing so, it came up as a link too. It was not my intention to do this, it was an error.
     
  4. I understand your theory but it's not backed by data. Do you have survey data that people want to work more hours? If surveys don't suggest that this is the case, then we could suspect that workers are on the steep part of the income-leisure indifference curve, and income would have to be bumped up a lot more than your tax proposition would for workers to give up more leisure time.

    In addition to workers working long hours being less productive, you'd also send workers into fields where they have less expertise, which further reduces their productivity. Part-time jobs aren't exactly known for being jobs with high productivity either.

    Taxman is not going to clock that you worked six hours instead of eight and then worked two hours doing the same tasks at "the second job". New biz will also have huge tax advantage over established businesses. Let's ask construction and hospitality industries how they feel about competitors whose employees don't pay taxes.
     
  5. Most people in the UK will work more at the moment, with high mortgage payments and a real term fall in pay. Not only do you get a second personal allowance with the SASI but the tax rates start again for the second business.

    In terms of productivity if more is produced productivity is increased on a macroeconomic level even if an individual worker is producing a lesser hourly rate, as long as they are working more the overall economy is still growing. Individual productivity may fall.

    In the UK you have to register each business independently. Each business has to be stated in the annual self assessment form and then details of its operations have to be put in. You would get a second personal taxation allowance for the second registered business.

    In terms of getting round paying tax. That is exactly what I am trying to do. I am trying to build a second legal System D economy on top of the existing taxed economy. As long as the new economy does not affect the existing economy it will work.

    You can only get the second personal taxation allowance if you are in and remain in primary occupation. Primary Occupation is the occupation generating the greater amount of income. Most Primary forms of occupation will require a minimum number of working hours.

    It is hard to get around employment regulation on the part of the employee in the UK. By offering this new supplementary form of income or treating supplementary income differently in the taxation regime will massively benefit people on low incomes who could earn more.

    Getting two part time jobs and two personal allowances is good. Most part time jobs on their own will not surpass the primary or secondary allowances and each occupation cannot use the others allowance. It is similar to a separate entity you can draw tax free income from.

    You do not get £23,000 of allowances. One occupation gets £11,500 and the second occupation gets the other £11,500. Most part time jobs will not generate over that amount so I think it is unlikely someone in full time occupation will take two part time jobs to avoid tax.

    You would be limiting yourself to £23,000 of untaxed income instead of whatever you would get for full time work, you also assume they would be able to get the exact amount of part time work they would need to reach that amount.

    Most people in part time work lack job security so they will lose a lot by not working full time. The supplementary allowance will help people who cannot get full time work receive some compensation for the losses of not being in full time work and could make it similar.

    It might be worth someone in part time work taking more part time work, which would not impact existing tax intake. It might be worth someone in full time employment taking part time work or starting a business and not impact existing tax intake. Output would increase.

    In terms of people wanting more work. Yes I think they will want it due to the increase in pay disputes and real incomes falling. Most people will want to work their way out of poverty if they can. This is a way of enabling, what could be minimal extra work for a lot more reward.

    You are also assuming the whole thing is about jobs. It is not, starting and operating a business if different from working for someone else. You could perform independent trade and not have to pay tax on it up to £11,500. Think System D but legal. Is time an issue?
     
  6. Forget work even. £11,500 of tax free trade. I'll sell an old painting or I'll get a sales commission for beer that I don't have to pay tax on profits. This will make the cost of beer fall too, if the purveyor passes on the savings. Do you want to buy cheap beer? Yes. OK sign this document and it will be delivered.

    Can you see how this will not take too much time or effort, how it can reduce the cost of goods and services and that you can only get it if you are already in work and paying tax not impacting existing tax intake or the primary economy apart from the primary economy might be able to get cheaper goods?
     
  7. I really think people have got too used to the idea of someone else giving them work and a salary rather than running their own business. Or simply just trading goods they have without tax.